The importance of effective operations in SMEs

This article was written by Aaron Tan, Senior Teaching Fellow and Help to Grow: Management Programme Director at Greenwich Business School, University of Greenwich.

In the increasingly competitive environment businesses of all sizes operate in, the planning, strategy, and implementation of new ideas is vital to success.

Changes to benefit a business, particularly Small to Medium-sized Enterprises (SMEs), usually take place in operations. This can be difficult for those who must balance implementing new strategies with limited resources. Module 10 of the Help to Grow: Management Course focuses on effective operations to help SME leaders look at their existing processes and identify where improvements can be made.

The Effective Operations module helps SME leaders to identify the operations within their business and the outcomes they could achieve. Once this is done, the module outlines critical questions that decision makers can ask themselves to drive their operations towards excellence. For example, do the products or services delivered meet or exceed the expectations of customers? How do costs compare to competitors and how quickly are problems resolved once challenges are identified?

The module presents objective criteria to monitor operational efficiency whilst building on the content delivered in earlier modules on strategy and digital transformation. Criteria includes the speed, cost, flexibility, dependability and quality of a business’ operations. There will usually be a trade-off between these criteria, requiring choices to be made based on the business’ goals and products.

As SMEs develop, it can be tempting to continue with the same processes because “that’s how we have always done it”. However, it should be recognised that different processes will be suitable under different conditions – scalability being a key consideration.

The Effective Operations module helps to guide decision makers towards understanding the link between strategy and operations and defining the appropriate measures of efficiency. In most cases this will be associated with costs, but this can also be associated with speed and consistency of output as well as other measures. Understanding why something is being done is equally important as knowing how it is done.

When SMEs experience growth in their business, it is important that the reputation of the business is not compromised. By managing resources effectively and selecting the appropriate

technologies, businesses can minimise waste and fully explore opportunities. For example, identifying optimal levels of inventory will minimise excessive storage costs whilst positioning the business for surges in demand. This is important because as the business grows, delegation and systemisation are needed so that key members of the business are freed up to focus on expanding the business rather than being limited to making sure that nothing goes wrong.

SMEs which invest time and effort into developing effective operations which can be replicated and scaled with minimal intervention from decision makers are more likely to succeed. If consistency can be achieved within the confines of limited resources, then this is the foundation for long term success.